All posts tagged north africa

West Texas Intermediate oil prices are surging, but Brent Crude in London is gaining far less. The combination has narrowed the unusually large spread between the two oil measures to a bit over $10.

Earlier this month, Deutsche Bank forecast that the Brent-WTI spread would be about $10 for most of 2011, citing high inventories of crude at the Cushing, Okla., delivery point for WTI. Since then, however, flaring unrest in the Middle East and North Africa, notably in oil-rich Libya, sent Brent soaring, sharply widening the spread to a record wide of about $20.

Comments this morning by Libya’s Col. Ghadafi on state TV that he has no intention of stepping down has helped give Brent a small surge.

Today, WTI is up more than $4 a barrel to just above $94 a barrel. Brent is up about 70 cents to more than $106 a barrel.

Despite high inventories at Cushing, the spread is narrowing because WTI is catching up to Brent. This reflects broader pressure on oil prices globally. OPEC said earlier this morning that its basket of 12 export crudes rose above $100 a barrel for the first time in two-and-a-half years.

The U.S. Oil Fund ETF (USO) is up 5% and the iPath S&P GSCI Crude Oil ETN (OIL) is up 5.3% today.

Escalating antiregime protests in Egypt are increasing perceptions of political risk in the region, pressuring currencies and driving up the cost of insuring government debt against default.

In Egypt, the cost to investors of debt insurance has gone up 25% this week, adding pressure on debt issued by other governments in the region as investors worry about the possible spread of instability.

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